We usually give gratuities to our employees every year but for this year, we also provided some assistance due to recent flooding. Can we treat the financial support we provided to those who were affected by the floods as
expenses for corporate income tax purposes?
A support in the form of financial assistance or accommodation offers that your company provided to your employees who were affected by the flooding can be treated as expenses for corporate income tax purposes.
You mentioned that you usually give gratuities to your employees but you also provide some assistance for this year due to recent flooding. In this case, your company should set guidelines and criteria for providing support to all employees affected by the flooding, and the employee support fund should be reasonable and appropriate. It is advisable to have a resolution by the company’s board of directors, indicating that the assistance is available to all and not to a specific group of persons.
Meanwhile, for the employees who were affected by the recent flooding, who may be wondering if they have to treat the assistance provided by the employer as taxable income, here is the answer.
The assistance, in a form of financial support or accommodation offers that your employer provided to you and other employees affected by the flooding should be treated as “financial support provided under a moral obligation”, and thus is exempted from personal income tax. Therefore, the company should not withhold personal income tax in respect of the financial assistance provided to affected employees.
Moreover, financial assistance provided by employers to employees as compensation for damage is exempted from income tax to the extent that it does not exceed the actual damage; but the actual damage has to be proven.
However, please note that it is possible that some tax officials may interpret the above issues differently and this has yet to be resolved among various organizations and the Revenue Department.
Contact MSNA, Thailand accountant, for your Thailand tax and accounting questions.